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Roadrunner Transportation Systems Inc. Stock Downgraded (RRTS)

In the fifth paragraph "same period one year prior" has been corrected to read "industry average".

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (
TheStreet)
-- Roadrunner Transportation Systems (NYSE:
RRTS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

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Highlights from the ratings report include:

The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 23.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.26, which illustrates the ability to avoid short-term cash problems.

The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Road & Rail industry and the overall market, ROADRUNNER TRANS SVCS HLDGS's return on equity is below that of both the industry average and the S&P 500.

The gross profit margin for ROADRUNNER TRANS SVCS HLDGS is rather low; currently it is at 18.90%. Regardless of RRTS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RRTS's net profit margin of 3.50% is significantly lower than the industry average.

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Roadrunner Transportation Systems, Inc., together with its subsidiaries, provides asset-light transportation and logistics services. The company has a P/E ratio of 15.8, below the S&P 500 P/E ratio of 17.7. Roadrunner Transportation Systems has a market cap of $547.9 million and is part of the services sector and transportation industry. Shares are up 25.3% year to date as of the close of trading on Friday.